Member Info for Hexam

"Today’s update basically told the markets that this month we have lost $13.2m at an operating level.. This is because of three factors that are completely out of our control - the mining difficulty, the value of btc and the value of USD against GBP"

True Wolf, but to be fair the value of btc is by far the biggest of the three factors you mention and it usually will be given that ARB allow all gains and losses on the value of HODL to flow directly through to profits. February is currently looking much better from that perspective :)

FP - "maybe they will try and do it in small steps in line with paying for rigs on delivery".

They may not have a choice. We don't know exactly how much is outstanding on the first 20,000 machines but I doubt they have enough BTC (that isn't already tied up in loan collateral) to pay off the balance in one go and a further BTC backed loan would generate even less. Another non-BTC backed loan may be possible but whether they could successfully raise enough for the first 20,000 machines (let alone 60,000) is I think extremely doubtful. The third of the main options is a raise and that could get the most but a big raise would be difficult and painful at the current sp.

So my guess is that they will continue with a piecemeal, mix and match approach to spread the pain using the most attractive option at each point - partly because it is probably the most sensible approach but also because they may have little choice (unless a big JV is in the offing).

I think we'll find out soon though what the first move is.

“If it made a difference just once to mining a block. 6.25btc will make a large difference to profit & efficiency that month it happened”.

Agreed, in that context for that month.

FP - that’s why I said broadly in line but if what you are saying had a significant impact then I think it would be noticeable. So yes, you may be correct but if so then I don’t think it is a major impact i.e. just because you can’t notice the impact I’m not saying this proves you are wrong, just that perhaps it doesn’t matter that much?

FP - You may well be right as my argument was based on just the maths assuming in the first place, like AB, that the share of global EH alone (plus a bit of randomness) determined directly the probability of each block being mined. If this is not true then my logic falls down. I don’t know enough about the mechanics though to know if it is more than just straight EH though and can’t I’m afraid answer your question about pools.

Any other impact would seem to be small though as miners’ figures do seem to vary broadly in line with their relative EH.

@Jaybike - The RNS clearly states the figures include the BTC equivalent of other coins. The numbers don’t make sense if they are in addition.

19 have indeed gone ‘missing’ this month and I don’t see this being due to Argo Labs as the 10% should still be in the total mined. They have sold some this month so that will be at least part of the reason.

FP,

Thanks. If there is one thing I'm passably good at it's maths - I wish it were football, or picking shares, but hey ho.

I see what you are trying to say but in this case I am confident there is no compounding effect. It is straight probabilities where the probability (as I understand it) is governed by the share of the overall hashrate. So if that share doesn't change then neither does the probability.

FP - I think we'll have to agree to disagree as I think the example you give double counts the same impact. It is having the extra 1EH that gives miner 2 the extra probability of getting the block solved first (twice as much). So if there was only 6 coins to be mined in the world then miner 2 would get 4 and miner 1 would get 2 (on average)

If they both double then miner 2 now has 2EH more than miner 1 but it is still only double miner 1 overall, so double the probability just as it was before. So miner 2 now has 4EH out of a total of 6EH and miner 1 has 2EH. So if 6 coins are still available then miner 2 will still mine 4 and miner 1 would still mine 2 (on average).

"The amount of users posting FUD on here is unreal."

Where? I don't think I have seen much. Examples? The numbers were bad this month there is no disguising it.

FP - I don't think it works like that.

In your example if I had a 60% chance of catching the ball and you had a 40% chance then I actually have a 50% more chance of catching the ball (not 10%) i.e. on average I would catch 6 in every 10 balls and you would catch 4. If we both doubled our size and power I would still be 50% more likely to catch the ball as we would both have improved at the same rate even though in absolute terms I would have increased my size and power more (by 50% in order to maintain the same 50% advantage).

Probably not the best explanation as rushing a bit but bottom line is that I think having 1% of the global hashrate means that you should mine about 1% of the coins and 10% means you should mine around 10% of the coins. This doesn't change whatever ever the total hash rate - if it did then it wouldn't be true now.

FP - must admit I don't quite get what you are saying.

Are you suggesting that if every company doubles their hash rate then those with larger hashrates will mine more and those with lower hashrates will mine less? My understanding is that (allowing for a little randomness) they will all still mine roughly the same?

"If we still mine 172 off a “difficult” month (74%), I’m ok with that. Still a modest $7,000,000 at today’s prices give or take a few hundred grand!"

True - but that's before the other $4m or so of other monthly costs that have to covered too but that are not included in the 74% mining margin. Also the difficulty will probably keep increasing every month which is why it so key to get that extra 2EH already on order up and running as soon as possible (and not to stop there).

@AdeleK - "ARB Jan 172 ("company owned 2,748 Bitcoin of which 262 were BTC equivalents")

What does that last bit mean"

ARB do mine and hold a small amount of coins other than BTC but for reporting purposes these get lumped in with the BTC at the equivalent BTC price. So for example if they held 2 other coins worth around $20k each these would be counted as 1 BTC (worth around $40k).

As the prices of these other coins move differently to BTC it means that the HODL at the end of the month will not usually add up exactly to that at the start of the month plus new coins mined. This month if you do the sum there are 19 BTC missing but there could be other reasons for this too - including selling BTC (which the financials show they have done a bit of this month).

Adele, The 1831 and 2045 you quote for Argo in Nov and Dec are just the total coins mined in 2021 not total HODL. The 2,748 you quote for end of Jan is HODL so much bigger as it includes purchased BTC and any mined before 2021.

As to difficulty this did indeed increase by over 9% mid-January but it is the average difficulty over the whole month that drives production figures and this increased just 6% from December to January.

Wolf - It is not exactly linear as there is an element of chance in who mines the next block so it is not determined exactly by share of global hashrate. Even so, the drop is so large this month it looks to be due to something beyond just difficulty and randomness. By knowing what this is would give a better idea of whether it is just a one off or not.

@Blubay - The in efficiency is due simply to the combination of the drop in mining numbers AND the ~20% drop in average BTC value so although it looks bad it is just maths and most of the drop is outside their control. But as only 6% of the drop in mining figures is due to difficulty the other 14% is for other reasons - and whilst I agree there could be plenty of other reasons a bit of transparency about what they may be would have been good as the gap is quite large (and probably too large for just randomness)?

Average difficulty increased in the month by around 6% but the number of coins mined dropped by 20% so think the line "This reduction during January is primarily due to an increase in network difficulty" is at best disingenuous and it would have been nice to understand a bit more about why the mining figures are so poor for January (or were so good for December).

@Chuz - Yeah, I'll give it a bit less than 50/50 chance of paying off but in any event a very interesting one to watch from the sidelines and could have a big impact on how other miners play their hands depending on what happens next.

@Chuz,

I think profitability is important for the sp outlook for shareholders as the more profitable the company is the higher the sp is likely to be - or in your terms the more 'greater fools' are likely to be found. Same is true of any share really where no dividends are likely to be paid (which probably covers most US stocks and most, if not all, miners).

Having said this IF the claims about the 26.4 EH being generated prove to be true then the payback period is just a year or so probably (once they are installed).

Btw - only $400m of the funding looks to be in shares - though it's not entirely clear so profitably will be important to the company too (though I would argue it would be anyway regardless of whether funding was 'free money' via shares or not).

In any event, it's a big, bold move which could pay off big time...or could blow up spectacularly in their face.

Yes, it is a race - and not just to do with the halving cycle (that just marks the next stage finish). It's a race we don't have to win though - but it would be best if we at least stayed on the same lap as the leaders.